Recommendation
We recommend updating internal policy over subrecipient monitoring and recommend implementation of effective internal controls and procedures over subrecipient monitoring and tracking that allow for compliance with all applicable federal laws, regulations, and compliance requirements of various federal grants.
It seems likely that additional monitoring activities are being performed that are not currently being documented in a central location and, therefore we also recommend standardizing the documentation of monitoring activities, using monitoring logs, monitoring checklists, and audit test sheets, etc.
If the Department is experiencing periods where understaffing or staffing turnover is an issue causing risk of noncompliance, we recommend that the Department properly address those risks and consider contracting out certain monitoring controls to a third-party professional service firm.
Management Response
Corrective Action: Serve New Mexico acknowledges the lack of sufficient documentation for annual site visits and that fiscal monitoring activities for the 2023-2024 program year were not sufficient. To address
this, we are revising our policies and procedures to comply with 2 CFR 200.303 (Internal Controls) and 2
CFR 200.332 (Requirements for Pass-Through Entities).
Key actions we are implementing include:
1. Site Visits Documentation: We will conduct regular site visits as a component of our monitoring
activities for 2024-2025 program year with clear, consistent and documented objectives for each visit and proper documentation of monitoring activities conducted during each visit.
2. Expansion of Fiscal Monitoring: Review of cost documentation will be expanded to include all subgrantees, regardless of risk, and for subrecipients subject to heightened fiscal monitoring, review of more than one month of documentation will be conducted.
3. Centralized Documentation: All supporting documentation will be scanned and stored in a centralized shared folder. This will ensure clarity and accessibility of records, particularly in the event of staff turnover.
4. Collaboration with a Consultant: Our Fiscal and Compliance Officer is working closely with a consultant to streamline fiscal policies and procedures in line with 2 CFR 200—Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.
5. Uniform Audit Test Sheet: We will develop a standardized audit test sheet to ensure that all programmatic and fiscal monitoring activities are consistently documented across all programs.
These steps are designed to ensure compliance and enhance the effectiveness of our monitoring processes, addressing the findings of the audit comprehensively
Due Date of Completion: June 30, 2025
Responsible Party(ies): Serve New Mexico Director